GURMUKH SINGH Vs. INDERPRASTH FINANCE CO

JUDGEMENT

(1.) By these petitions under Section 115 of the Code of Civil Procedure, the petitioners who are plaintiffs in different suits filed by them against a financing Company, respondent in the present petitions, challenge an order of the First Appellate Court by which the petitioner's applications, under Order 39 Rules 1 & 2 of the Code of Civil Procedure, to restrain the financing company from seizing the vehicles in dispute, were dismissed.

(2.) . It appears that the financing company concerned had financed to the extent of different amounts and on different dates, the purchase by the petitioners of different motor vehicles under identical arrangements which purport to be and have the appearance of hire purchase agreement. It is the case of the financing company that, in terms of the hire purchase agreements in question, the hirers were under an obligation to pay a monthly instalment of a specified amount with the option to purchase the property after a specified amount had been paid to the financing company. It is the further case of the financing company that in terms of the agreements, if the petitioners made default in the payment of any instalment, the financing company was entitled to terminate the agreements, with or without notice, and to exercise its licence to seize the motor vehicles. It is further claimed that the agreements, contained an arbitration clause. According to the financing company, the several petitioners made default in the payment of certain instalments as a result of which the agreements were terminated and the company became entitled to exercise the licence to seize the motor vehicles. Apprehending such unilateral action, the petitioners filed suits for a permanent injunction to restrain the financing company from seizing the motor vehicles on the allegations that the petitioners had purchased these motor vehicles partly or wholly with the funds advanced to them by the financing company by way of loan, that the transactions were, therefore, that of loans on the security of the vehicles ; that the ownership in the vehicles vested in the petitioners ; that the petitioners had repaid to the financing company much more than the amounts which had been advanced by the company besides a reasonable return on such amounts, and that in any event, any default in the repayment of the loan would not entitle the financing company to seize the property which belonged to the petitioners. Alongwith the suits, application under order 39 rules 1 & 2 of the Code of Civil Procedure were also filed and the petitioners obtained ex-parte injunctions restraining the financing company from seizing the motor vehicles concerned. On the applications being opposed, the ex-parte injunctions were vacated and the applications were dismissed by the trial court. The financing company at the same time made a motion under Section 34 of the Arbitration Act for stay of the proceedings which was opposed on behalf of the petitioners on the ground that there were no valid hire purchase agreements and that the several petitioners had signed blank forms at the instance of the financing company when the loan was advanced to them. The trial court, therefore, framed an issue whether there was no valid hire purchase agreement between the parties. The order of the trial court dismissing the application for an injunction has been upheld by the First Appellate court.

(3.) . Shri K.L. Arya, who appears for the petitioners, contends that the suits out of which the petitions have arisen a substantial question whether the agreements entered into between the parties were in the nature of hire purchase agreements or mere loaning transactions which has to be decide d at the hearing of the suits not only on the construction of the documents, said to have been executed between the parties but also on a consideretion of the facts and circumstances preceding and attending on the transactions with a view to determine the true nature of the transactions and the real intent of the parties. He, therefore, urged that the petitioners had a Prima facie case for the interim protection being given to the petitioners and that the trial court, therefore committed material irregularity in the exercise of its jurisdiction and transgressed the limit of its jurisdiction by going into the question at the preliminary stage of the proceedings which could be only gone into at the hearing of the suit. It was further urged that the balance of convenience and equities were in favour of the petitioners, who wera petty taxi drivers and had invested large amounts and had paid substantial amounts to the financing company and were being compelled, on pain of losing their property, to pay fantastic return on the money advanced to them. It is further alleged that grave and serious hardship would be caused to the petitioners if the interim protection was denied to them. It was further urged that, assuming that the arrangements were in the nature of hire purchase agreements, the financing company was nevertheless net entitled to seize the vehicles without the invervention of the court and, in any event could not invoke the provision with regard to the seizure without terminating the agreements in writing, which they had admittedly not done.